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The rise of Made in India digital content

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Indian apps have retained 65-70% of the Tiktok era users driven by acquisiton of influencers on these platforms as well as efforts to provide similar/ better product experience for creators and users. 30-35% of users on short-form video have been acquired through aggressive customer acquisition and marketing push by Indian apps. The new users getting on-boarded have a higher share of tier-2+ users driven by stronger focus of platforms on vernacular content and ‘Bharat’ positioning.

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The rise of Made in India digital content

  1. 1. Short-form video The rise of Made in India digital content
  2. 2. 2 Disclaimer Copyright © RedSeer Management Consulting Private Limited (“RedSeer”). All rights reserved. While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, all data and information provided in this report is intended solely for information purposes and general guidance on matters of interest for the personal use of the reader, who shall accept full responsibility for its use. RedSeer does and seeks to do business with companies covered in its research reports. As a result, readers should be aware that RedSeer may have a conflict of interest that could affect the objectivity of the report. All information in this report is provided “as is”, with no guarantee of completeness, accuracy, of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in the information contained in this report. Accordingly, the information in this report is provided with the understanding that the authors herein are not engaged in rendering legal, accounting, tax, or other professional advice or services. As such, it should not be used as a substitute for consultation with professional advisers. This report cannot be sold for consideration, within or outside India, without the express written permission of RedSeer. In no event shall RedSeer or its partners, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any errors, omissions, or delays in the content of this report or any losses, injuries, or damages including any incidental or any consequential, special or similar loss or damages, arising out of, or in connection with the use of this report.
  3. 3. 3 Executive Summary 1.  Riding on the India digital wave, digital content sector has been the largest gainer 1. India continues to ride on a strong digital wave 2. Digital content has been one of the largest gainers 2. Short-form video user base is back to nearly 100% of pre TikTok ban, with strong loyalty to Indian apps 1. Strong recovery by the shortform industry after the TikTok ban with respect to traffic and engagement 2. New users getting on-boarded in short-form video space with strong loyalty to Indian apps 3. The gap between short-form and overall digital content on engagement and NPS indicators is coming down 4.  Short-form video has differentiated itself from other global social media and content through a strong ‘Bharat’ positioning 5.  User perspectives show varied use cases and strong value prop 6.  Short-form video is moving from middle of the internet funnel towards the top
  4. 4. 4 Executive Summary 3. Strong network effects fuelling ecosystem growth leading to large monetization potential for both influencers and platforms 1. Users and influencers feeding each others’ growth on the platforms 2. Self motivation propelling the influencer ecosystem driven by highest income potential in gig economy 3. Vast earning potential at the top-end of influencer pool leading to strong motivation and higher platform satisfaction 4. Number of follower for top influencers vary from 4Mn to 15Mn 5. Social media is one of the fastest growing advertising channel with ~$2.4Bn annual spend 6. Strong advertiser interest in short-form video platforms 7. Strong monetization potential across ads and live commerce 4. Consumer and Influencer experience defining the market leaders and laggards 1. Players with high quality content, strong recommendation and better satisfaction of non-metro users have higher consumer NPS 2. Higher # of followers and reach of posts driving influencer satisfaction
  5. 5. 1. Riding on the India digital wave, digital content sector has been the largest gainer
  6. 6. 6 20 0 150 300 450 600 750 900 1050 2010 2 20 00 00 0 2020 2016 # of smartphone users 2014 2025F Internet enabled 2G phones Low cost 3G enabled Smartphones Jio -Affordable 4G LTE Desktop Internet 242 525 825 44 Key Drivers of Adoption India continues to ride on a strong digital wave Source(s): Expert Interviews, RedSeer IP, RedSeer Analysis Smartphone Users, India Mn (FY2000 – FY25F)
  7. 7. 7 India continues to ride on a strong digital wave Data consumption per smartphone highest globally, growing by 30%+ in last one year Source(s): Ericsson mobility report (2020,2021), RedSeer Analysis Data Consumption per month per smartphone In Gigabytes per month, FY’20 - FY’21 12.0 8.5 8.2 7.5 7.0 5.8 4.6 5.0 3.9 1.6 15.7 11.8 11.3 11.1 9.4 7.3 7.6 6.0 5.8 2.2 SE Asia and Oceania Sub-Saharan Africa Latin America NE Asia Western Europe Global Average Central and Eastern Europe ME and North Africa North America I In nd di ia a +31% FY21 FY20 67% higher than global average Key Drivers 1. Cheap Data Costs 2. Large section of lower income profile with time in hand have access to smartphones; this cohort drives the consumption
  8. 8. 8 Digital content has been one of the largest gainers One of the four large internet economies in digital content-heavy high smartphone usage Note : Digital Content includes online content streams such as OTT Video, Social Media, OTT Audio, etc. Source(s): Secondary Research, RedSeer IP, RedSeer Analysis Average time spent vs Online Content Consumption, Top countries FY 2020-2021 0% 25% 50% 75% 3.0 4.0 5.0 % Time Spent on Content (FY 21) China Brazil Size Represents # Smartphone Users Mn Average hours spent on smartphone per day (FY21) Indonesia Mexico India South Korea Japan Canada USA UK Russia Australia Digital Content heavy Moderate smartphone usage Moderate Digital Content contribution High smartphone usage Moderate Digital Content contribution Moderate smartphone usage Digital Content Heavy High smartphone usage
  9. 9. 2. Short-form video user base is back to nearly 100% of pre TikTok ban, with strong loyalty to Indian apps
  10. 10. 10 TherecoverybytheshortformindustryaftertheTikTokbanhasbeensharp Pre v/s Post Tiktok Ban Source(s): Primary Research, RedSeer Analysis, Consumer Surveys Daily unique Active Users, Overall time spent; Feb 20 –Mar 21 0% 20% 40% 60% 80% 100% 120% Feb-20 Mar Apr May June July Sept Nov Jan Mar-21 Daily unique active users 1. Daily unique active users is back to 97% of Jun 2020 (before TikTok ban) driven by aggressive market- ing and user acquisition by plat- forms 2. Time spent on short-form video has reached 55% of June 2020 which indicates that Indian plat- forms are still maturing and there is a strong market opportunity Total time spent on short-form video platforms TikTok Ban % of Tiktok Market Captured 97% 55%
  11. 11. 11 Most of the new Shortform Users have been added from the longtail cities Source(s): Primary Research, RedSeer Analysis, Consumer Surveys Daily unique Active Users, Overall time spent; Feb 20 –Mar 21 Key Highlights • Indian apps have retained 65-70% of the Tiktok era users driven by acquisiton of influencers on these platforms as well as efforts to provide similar/ better product experience for creators and users • 30-35% of users on short-form video have been acquired through aggressive customer acquisition and marketing push by Indian apps • The new users getting on-boarded have a higher share of tier-2+ users driven by stronger focus of platforms on vernacular content and ‘Bharat’ positioning 30-35% current short-form video users have started using short-form video after Tiktok ban …and a similar number of users churned out after Tik Tok was banned 30-35% No N = 535 65-70% Yes Question: “Did you use TikTok before the ban?”
  12. 12. 12 New users getting on-boarded in short-form video space with strong loyalty to Indian apps Source(s): Primary Research, RedSeer Analysis, Consumer Surveys Users also do not see a strong reason to switch back to Chinese Apps • I loved Tiktok because of the personalization. These Indian apps in the market are equally good. They also provide relevant recommendations and I am very satisfied. - Metro User • All my favourite influencers who were on Tiktok are on the Indian Apps and they generate similar high quality content. So I don’t see the need to switch. - Tier 1 User • The content on the Indian Apps is really on par or even better than Tiktok. They also host a lot of hashtag challenges and contests. I am very happy with the current apps - Tier 2+ User • I am not willing to use any Chinese app. The Indian app has all the essentials features and tools that are present on the Chinese Apps - Tier 2+ User 75% current short-form video users are unlikely to switch back to Chinese apps even if the ban was lifted Question: “How likely are you to continue using ‘made in India’ apps if the ban on Chinese apps is lifted?” 6% 14% 33% 43% Unlikely 4 4% % Most Likely Likely Neutral Most Unlikely N = 535 1 2 3 4
  13. 13. 13 The gap between short-form and overall digital content on engagement and NPS indicators is narrowing Note : 1. Digital Content is Ex of Shortform Video and it includes online content streams such as OTT Video, Social Media, OTT Audio, Etc. Source(s): Expert Discussions, RedSeer IP, RedSeer Analysis DAU/ MAU (Sector average) in % Time Spent per DAU (sector average), in mins NPS (Sector average) in % Platform Stickiness- DAU/ MAU (%) Time Spent per DAU per day (in mins) Platform NPS (%) Key takeaways 48% Short-Form Digital Content1 43% 30 Short-Form Digital Content1 41 28% Short-Form Digital Content1 34% DAU/ MAU: Strong user repeat behavior compared to other sectors due to higher freshness of content Time Spent per DAU : This has been seeing consistent growth in the last few months as personalization engines have become smarter NPS : With continuously improving experience, NPS is likely to start catching up in the next 1 year
  14. 14. 14 Short-form video has differentiated itself from other global social media and content through a strong ‘Bharat’ positioning Source(s): Expert Discussions, RedSeer IP, RedSeer Analysis Tierwise Segmentation of Monthly Users March ‘21 Key Highlights Tier 2+ • Vernacular Focused Content • Recreational genres such as Comedy, Dance, etc are more preferred Tier 1 • Hindi Content Preferred • Music, Food and comedy genres are consumed the most Metro • English Content Preferred • Fashion, Education, Motivational content is sought for Tier 2+ Tier 1 Metro Short Form Video 30-35% 30-35% 35-40% 40-45% 30-35% 20-25% 60-62% 20-22% 18-20% 89-91% 4-5% 5-6% Indian Population
  15. 15. 15 Note : 1. Digital Content includes online content streams such as OTT Video, Social Media, OTT Audio, etc. Source(s): Expert Discussions, RedSeer IP, RedSeer Analysis Key findings from user survey N=535 Vernacular content driving the usage Data privacy cited as a major concern Live commerce high on wishlist 55% users mention availability of regional vernacular content as the key reason for using short-form video apps 60% users mention data privacy as the key challenge while ~50% complained about streaming quality unregulated content ~45% users would like more professionally generated content. Live commerce and online education are key features in the user wish-list (~40% each) User perspectives show varied use cases and strong value prop
  16. 16. 16 160-170 ~48% 320 ~76% 100% 660 500 ~60% Access to Internet population with access to inTotal ternet Active internet Users Uses social media, google,, but doesn’t transact online Short-form Installed Base Users who use short-video apps like JOSH, Moj, MX TakaTak FY 25 Projections Online Shoppers At least one transaction on online retail platforms in a year Short-form video is moving from middle of the internet funnel towards the top Note(s): 1. An internet enabled device could be used by user’s family and hence they are also counted under access to internet Source(s): Expert Interviews, RedSeer IP, RedSeer Analysis Internet Users Funnel FY 21 - 25 In Mn
  17. 17. 3. Strong network effects fuelling ecosystem growth leading to large monetization potential for both influencers and platforms
  18. 18. 18 Users and influencers feeding each others’ growth on the platforms Source(s): Expert Interviews, Consumer Surveys, RedSeer Analysis Growing influencers on platforms Increasing user base User View Influencer View Strong network effects Strong network effects Influencer availability is the most important decision making criterion for 50% of users to choose the platform Large user base is the most important decision making criterion for 65% of influencers to choose the platform
  19. 19. 19 Self motivation propelling the influencer ecosystem driven by highest income potential in gig economy 10+ Million (top content creators on the platform) Elite Influencers Mega Influencers Upcoming Influencers 1+ Million (famous but not the top content creators on the platform) 1 Million (budding creators) Followers Monthly Earnings¹ Key Highlights ~ $20-40k ~ $1.5-2.5k ~ $40-200 • Exclusive contracts with apps • Multiple brand deals • Contracts of 6 months with apps • Few brand deals • Masses consume educational and music content the most • Caters to a broader age group Note(s: )1. Inclusive of all sources including brand deals Source(s): Expert Discussion, RedSeer Analysis The excess of time due to staying at home, coupled with the short-form platforms adopting a model wherein the pay monthly to the content creators has led to more people taking up content creation on these platforms. Earning potential of content creators on short form apps
  20. 20. 20 Vast earning potential at the top-end of influencer pool leading to strong motivation and higher platform satisfaction Source(s): Expert Interviews, RedSeer IP, RedSeer Analysis The potential for Pro’s across competition is lesser : Cabs : 8X , Foodtech Delivery Partner : 4.2X, Salon Other services : 20X Vast earning potential… …leading to higher satisfaction Part-timers (Bottom 75%) Aspirers (Next 20%) Pro’s (Top 5%) 300X Strong motivation to continuously move-up Satisfaction of Partners across Internet Sectors March 2021 300X X 49% Shortform (Creator) FoodTech (Restaurants/ cloud kitchen) 48% eCommerce (Seller) 35% Home Services (Agents) 32% eMobility (Driver) 9%
  21. 21. 21 Digital media is one of the fastest growing advertising channel with $2.37 Bn+ annual spend Source(s): Expert Discussion, RedSeer Analysis, Dentsu-e4m-Digital Advertising Report 2021 Ad Spends on Digital Media by Format %, FY21 What are the reasons for exploring Short-form Platforms? $2.37+ Bn Digital Spends in FY21 29% 28% 24% 16% 4% Social Media Others Online Video Paid Search Display Banners • Social Media and Online Video constitute more than 50% of the digital media ad spend in India • The FMCG and media entertainment verticals spend the largest share of digital media budget on online video, making them the biggest sector to advertise on short-form video platforms • Indian Short-form platforms support more than 10 languages • Helps brands in reaching unexplored language dominated market • 41% of the users of the age group between 16-24 years • Helps new age and FMCG brands in targeted advertising • Various ad formats are available for the advertisers to choose from • Have high engagement rates and user stickiness • Rates for advertising is lower compared to other social platforms • CPM rates for TikTok are as low as $1 whereas it can go as high as $4 for Facebook’s news feed and stories Diverse Languages Younger Population Effective Video Advertising Cheaper Alternative
  22. 22. 22 Strong advertiser interest in short-form video platforms Source(s): Expert Discussion, RedSeer Analysis What are the factors that can be worked on by the platforms? What are the factors that interest the brands/ advertisers? Advertisers need to be made aware about advertising opportunities on short form platforms To capture the audience visiting short-form platforms not available on other platforms Immense opportunity for influencer marketing Lack of Awareness Extending brand reach The short-form platform market is highly fragmented with lack of advertiser awareness around competitive positioning Fragmented Market Brand building Advertisers incur low cost of production as compared to other platforms Low Cost of Production Presence of content in vernacular language helps to reach wider audience Diverse regional languages Collaboration with big influencers/celebrities for higher traffic Need to on-board big influencers Platforms to provide more transparency in ad measurement/engagement Higher Transparency by platform
  23. 23. 23 Strong monetization potential across ads and live commerce Source(s): Expert Discussion, RedSeer Analysis Social Commerce Live Commerce Viewers purchase products in real time while watching products in action and interacting with a host of a live show Viewers get tips and can shop the products featured directly Case Study: Walmart tied up with TikTok to host a livestream shopping feature in March 2021 + Content creators share videos about their experiences and post reviews and e-commerce brands can list their products Purchase option while watching videos Video reviews are available for products
  24. 24. 4. Consumer and Influencer experience defining the market leaders and laggards
  25. 25. 25 Note(s):1. An internet enabled device could be used by user’s family and hence they are also counted under access to internet Source(s): Expert Interviews, RedSeer IP, RedSeer Analysis Platforms with more than 50% awareness considered for further analysis MX TakaTak Prime Focus of the Study 40 + Short video apps Elimination Criteria 100% ~50% ~40% ~10% Top apps in Indian short-form video space In App Short-videos (Instagram Reels, FB shorts, Youtube Shorts Gaana hotshots, etc.) Chinese Short-form Apps Indian complete Short-video apps with user awareness 50%
  26. 26. 26 Josh – Fares higher on the NPS primarily on the back of increased satisfaction ( 47%) of Tier 2 users, primarily emerging from the Hindi-belt of India Moj – Performs well in the vernacular region, leading to best satisfaction (51%) in Tier 2+ , second best (38%) in Tier 1 cities MX Takatak – Secures the highest satisfaction ( 38%) across the competition in Metro cities Roposo – While Roposo does reasonably well in Tier 1+ cities (garnering ~30% NPS), it’s Metro users’ satisfaction is at 11% Source(s): RedSeer Analysis, User Surveys, RedSeer IP User Engagement vs. User Satisfaction ( NPS ) Shortform platforms Platforms with a strong localization and a better tech stack have enabled a higher user satisfaction Leader Challenger Challenger 0 50 100 20% 25% 30% 35% 40% User Satisfaction (NPS) User Engagement (DAU X Time Spent – Mn Mins) Indexed to 100, ~950 Mn mins =100 Roposo MX Takatak Moj Josh
  27. 27. 27 JOSH’s high NPS is primarily driven by increased satisfaction ( 65% ) of its influencers in the age group of 18-35 years, who form the bulk of the platform’s influencer base MX Takatak comes second to best in terms of Influencer satisfaction, as its major cohort of influencers garners an NPS of 53% Influencer Satisfaction (NPS) Average Followers (#Mn) Indexed to 100 Leader Challenger Challenger 0 50 100 20% 30% 40% 50% 60% 70% 80% Roposo MX Takatak Josh Moj Note(s): 1. Average followers considered for top 30 influencers on the platform Source(s): RedSeer Analysis, Influencer Surveys, RedSeer IP Influencer Satisfaction (NPS) Vs Average Followers1 Shortform platforms Platforms offering a wider reach and higher follower engagement to influencers have garnered higher Influencer NPS Size Represents# Average Views
  28. 28. 28 Source(s): RedSeer Analysis, Influencer User Surveys, RedSeer IP Parameter level performance Shortform platforms While most of the players draw similar traffic on their platforms, leaders have better engagement, retention and influencer ecosystem Engagement Metrics Total MAU Total DAU # of sessions per DAU # of minutes per session Time spent per DAU Retention ( Day 30) Influencer Metrics Average Followers Average Views Average Likes Average Shares Satisfaction NPS-Users NPS-Influencers MX TakaTak Leaders Laggards
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